Today’s Key Market Drivers: 27th August 2018
“S&P 500 US stock index reaches a record high.”
Currency markets will start the week without a major theme and therefore it is my view currency traders will take their lead from global stock indexes with the S&P 500 touching an all-time record high on Friday. This is likely going to mean the current trend back higher on the Euro and Pound continues with emerging market currencies reversing their recent slide lower. The US Dollar may also be set for a pullback with nothing new coming from the Jackson Hole Central Bankers summit. Jerome Powell, the US Fed Chair confirmed the Fed was committed to lifting the official cash rate two more times in 2018, which is now old news and therefore did not shift the US Dollar higher.
Turkey’s economic and currency crisis is now also old news and there is no high impacting data the market will care about until Wednesday when we get 2nd quarter US GDP figures. US Trade Balance and Consumer confidence numbers are due on Monday and Tuesday, however, it’s the GDP figures that will likely get the market’s attention. My thoughts are the US Dollar may pull back this week with all of the positive news now baked into the Greenback.
The Euro was the big winner last week benefiting from a weaker US Dollar and concerns surrounding European banks being exposed to Turkey’s woes subsided. The European Central Bank has indicated that it will wind up its multi-year long stimulus program in December and if it does confirm this the Euro in my view will continue to climb as traders will begin pricing in their expectations of higher interest rates at the ECB at some point in 2019. The ECB has kept its official cash rate at 0% in an attempt to stimulate growth, jobs, and inflation across the wider Euro area and positive economic traction is beginning to take hold. The Euro could be a stand out performer in the second half of 2018.
Stocks will begin on a positive footing this week and this will likely help support emerging markets currencies including the Euro, Pound, Aussie and Kiwi Dollars. Expect the unexpected and please look after your risk management.
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About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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